Heritage Bank ended the 2018-19 financial year with total assets of $10.088 billion, up 5.9 per cent from the previous year, and surpassing the $10-billion milestone for the first time.
According to the results, while the bank decreased its after tax profit by 3.9 per cent to $48.28 million, this “reflected the investment” the bank has made in technology and digital banking.
Looking at loan approvals, the bank increased approvals by 8.3 per cent to $1.880 billion in the 2018-19 financial year.
The total loan book grew by $396.15 million in the year, a 109.8 per cent uplift on the $188.80 million recorded in the previous year, the CEO of Heritage Bank, Peter Lock, stated.
“This represented a return to budgeted loan volumes off a flatter prior year performance,” he said.
Retail deposits grew by $364 million in the year to reach $6.938 billion as at 30 June 2019, a 5.5 per cent increase.
The bank’s CEO also noted that the mutual’s capital adequacy ratio increased to 14.42 per cent as at 30 June 2019, up from 14.11 per cent in the previous year, and its liquidity ratio increased to 15.50 per cent, from 14.74 per cent.
“We also grew our customer numbers by approximately 1.8 per cent,” Mr Lock said.
The CEO concluded that he was proud for the bank to deliver strong results for members in a “difficult environment”.
“Our strong and steady growth is testament to our effectiveness in meeting customer needs,” Mr Lock said.
“We’re very proud to be Australia’s largest customer-owned bank and to be increasing the value of the asset that our members have built up during our 144-year history.”
Looking forward, Heritage reiterated that it will open two new branches in Sydney by the end of 2019, the first branches to be opened outside of Queensland.
The first new branch will reportedly open in the suburb of Castle Hill in late October, while the second will open in Parramatta in mid-December, taking the bank’s total number of branches to 60.
Heritage chairman Kerry Betros said that while the bank is “embracing digital technologies”, the banks remains “absolutely committed” to maintaining and expanding its network of branches, which, according to Mr Betros, “is very different to the big banks who are closing down branches”.
“Online and mobile capabilities are fantastic and play a central role in our approach to transactions, but it’s the interaction that our customers have with our staff that’s at the heart and soul of our service offering,” Mr Betros said.
“The personal connection we can provide through our branches is extremely important, and we’re delighted to take that capability to the people of Sydney.”
Mr Betros said an overview of the 2018-19 year would not be complete without reference to the Hayne royal commission and suggested that the customer-owned banks are “fundamentally different” to the big banks because they don’t have “the conflict of trying to serve two masters – shareholders and customers”.
“Everything we do is in our customers’ interests,” Mr Betros said.
“The danger now is that the customer-owned sector will be penalised for the misdeeds of the big banks, because the royal commission will result in us facing greater regulation.
“Our smaller size means the extra cost of regulation will hit us harder, which actually reduces our competitiveness.
“We will continue lobbying the federal government to ensure that any extra regulation imposed on the banking sector is proportionate, rather than one size fits all.”
[Related: Mutual banks’ lending growth outpaces majors]
Hannah Dowling is a journalist for mortgage business, the leading source of news, opinion and strategy for professionals working in the mortgage industry.
Prior to joining the team at Mortgage Business, Hannah worked as a content producer for a podcast catering to property investors. She also spent 6 years working in the real estate sector at a local agency.
Hannah graduated from Macquarie University with a Bachelor of Media and Journalism.